India : RIL looks beyond oil & gas for new-age energy play

Reliance IndustriesBSE 1.64 % (RIL) is looking beyond oil and gas for opportunities in energy innovations, such as renewables and new-age mobility, while consolidating its position in the traditional exploration business by infusing $6 billion (Rs 40,000 crore) into the KG-D6 field in the east coast with its partner BP plc.

This is a major step in RIL's transformation from a brickand-mortar company to a conglomerate that will straddle the traditional and new-age energy space, consumer retail as well as digital and media world. And just like in exploration, RIL will go with BP in all of this. The two companies announced a strategic partnership for this journey, resuscitating and expanding the scope of a deal stitched in 2011for businesses in the oil industry.

BP chief executive Bob Dudley said the investment for developing discoveries in water depths of over 2,000 metres in the KG-D6 block will supply 10 per cent of India's projected gas demand by 2022. "Together with Reliance, I want to reinforce our commitment to working with the government to sup port the Prime Minister's (Narendra Modi's) call for import substitution and the development of a gas-based economy," Dudley said.

The announcement of the investment, in spite of ongoing arbitration proceedings against several government orders, marks a revival of investor sentiment, which had been clouded by political controversies over RIL-BP combine's dispute with government over issues pertaining to the KG-D6 field, particularly shortfall in gas production.

The fact that Ambani and Dudley flew down to Delhi to make the announcement indicates a vote of confidence in the policy and market reforms implemented in the three years of the Modi government. Oil minister Dharmendra Pradhan tweeted, "Welcome BP & RIL announcement to invest Rs 40,000 crore to produce gas; invest in downstream and develop lowcarbon energy business."